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Music sounds flat

Contraction, returns rep nongrowth in 1st half of year

Music industry consolidation and an increase in product returned by retailers contributed to a mostly flat domestic marketplace during the first half of 1999, according to figures released Thursday by the Recording Industry Assn. of America.

At midyear, the domestic market for recorded music — measured by what manufacturers ship to retail and nonretail channels — showed no increase in unit shipments and a marginal increase in dollar value.

The net number of all audio and video product that manufacturers shipped to U.S. markets was 502.5 million units at midyear 1998 compared with 501.0 million units in 1999 — a 0.3% decrease.

The dollar value of that product (calculated at suggested list price) grew from $5.8 billion at midyear 1998 to $6.0 billion this year — a tepid 1.8% increase.

“These results come on the heels of a year of incredible growth topped by one of the hottest fourth quarters in recent history,” said RIAA prexy and CEO Hilary Rosen. “Against this backdrop, it’s not that surprising that, in the first half of the year, the market has been flattened by an 8% increase in returns.”

By contrast, product sold through to consumers during the first half of 1999 topped 364.2 million units and was down from 380.3 million units sold during the same period in 1998.

Rosen noted that “the industry is also feeling the ripple effect of consolidations among some of the largest retailers and, subsequently, more conservative buying on the part of these retailers as they assess their inventory.”

The shipment of full-length CDs, edged up 7%, bringing the value of CD shipments to a record-breaking high of $5.2 billion in the first half of 1999.

CD shipments grew to 396.2 million units during the first half of 1999 from 370.6 million units during the same period in 1998.

CD dollar value increased to $5.2 billion in 1999 from $4.9 billion in 1998.

Full-length cassettes constituted 12.4% of all album unit shipments, suggesting cassettes remain an important part of the overall music market. Cassette sales represented a $482 million business, but its dollar value dropped from $616.4 million logged in 1998. Shipments dropped 17.9% to 56.3 million units in 1999 from 68.6 million units in the first six months of 1998.

Shipments of singles in all formats dropped in the first half of 1999 as record companies continue to assess how to strategically utilize the configuration in an effort to better service retail and support full-length product.

Singles shipments dropped 23.5% to 41.5 million units from 54.2 million units in 1998 with corresponding dollar value of singles shipments dropping 19.3% to $165.5 million in 1999 from $205 million in 1998.

In the first half of this year, shipments to direct and special markets — such as record clubs and as premiums — continued the steady improvement they showed throughout last year.

Unit shipment of all formats to direct and special markets grew 11% to 138.4 million in 1999 from 124.7 million in 1998.

Dollar value of shipments to direct and special markets grew 4.7% to $767.2 million in 1999 from $732.5 million in 1998.

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